UNICEF's past research on child poverty in developed countries (UNICEF, 2005; 2007) has often attracted a lot of attention in the UK, because it showed British child poverty rates to be remarkably high by international standards. In 2011, the organisation seemed to perform something of a U-turn, now diagnosing that British children and their parents were suffering from far too much consumption rather than too little:
‘UK parents almost seemed to be locked into a system of consumption which they knew was pointless but they found hard to resist, and found themselves “sucked in”[…] Parents and children alike knew that this sort of vicious cycle of consumption would not bring the happiness they intend but somehow they were compelled to continue’ (UNICEF, 2011, pp. 45–46).
The recent report, UNICEF (2012), returns to the familiar narrative of widespread child poverty, linked to ‘austerity’ policies. For critics of fiscal consolidation, the report was just what they had been waiting for. The Independent newspaper (2012) labelled it a ‘shock report’, and summarised it in the following way: ‘Government's spending cuts will have a “catastrophic” effect on British children, a UN agency has warned, endangering their future health, education and employment.’
UNICEF showing some improvement …
The recent UNICEF report is in many ways an improvement over previous ones. It addresses the weaknesses of relative poverty measures much more explicitly than previous studies have done (UNICEF, 2012, pp. 9–11). In prior reports, UNICEF had claimed, without much hesitation, that the UK had higher rates of child poverty than, for example, Hungary. The current report still uses such figures, but explains what they really mean. There are more British children living in households with incomes below 60% of the British median than there are Hungarian children living in households with incomes below 60% of the Hungarian median. But, since median incomes in Britain are about three times higher than in Hungary, the British relative poverty line itself is higher than median incomes in Hungary. UNICEF still defends relative poverty figures, but urges those who use them to make clear how these figures ought to be interpreted. This is a huge step forward. Currently, one of the most frequent sources of confusion in the poverty debate is that poverty campaigners routinely conflate relative poverty with absolute poverty and/or material deprivation. Relative poverty measures produce high poverty figures and absolute poverty measures often produce alarming descriptions, so poverty campaigners combine the figures of the former with the descriptions of the latter.
This UNICEF report also complements its analysis with a consumption-based child poverty measure, ‘Child Deprivation’. It measures the proportion of children lacking goods and services deemed, in a broad sense, ‘essential’. There are a number of problems with deprivation measures of this kind, but in the current arsenal of poverty indices, they are by far the best we have.
… But must try harder
On the whole, though, UNICEF remains faithful to the spirit of its earlier studies as far as its policy conclusions are concerned. In previous studies, based on relative measures, UNICEF used to conclude that poverty was largely a function of low public social spending levels (e.g. UNICEF, 2005, pp. 4–5). A similar claim is repeated in this report (UNICEF, 2012, pp. 26–27), this time specifically linked to austerity measures. For the UK, the following narrative is provided: under the previous government, child-related benefits were increased and, as a consequence, child poverty fell. Under this government, child-related benefits are being cut and, as a consequence, child poverty will revert to its former level (ibid. pp. 4–5). This is not an accurate characterisation of the UK experience, and it is not even backed by the UNICEF report's own figures.
It is true that social spending, especially on family-related benefits, has increased hugely over the past 15 years. By the mid-2000s, the British welfare state had reached Scandinavian proportions. In terms of total net social spending, the UK is in the same league as the Nordic (broadly defined) countries. In terms of expenditure on family-related benefits, the UK has even overtaken the Nordics (Table 1). These spending levels are currently being consolidated, but they are not being ‘cut’, on balance.
Table 1. Net social spending, total and family-related, % of GDP
Net social spending in % of GDP (public & publicly mandated)
Family Benefits in % of GDP
But did the preceding spending splurge make a difference? It did – initially. For a while, various measures of living standards at the lower end of the income distribution, especially among families with children, recorded improvements. Yet as soon as the rate of increase in spending slowed down, progress abruptly came to a halt. The poverty reduction strategy had failed to gather any momentum of its own; it was wholly reliant on ever-increasing injections of public spending. As soon as the increase in the funding stream slowed down, progress stagnated and threatened to go into reverse. Poverty reduction was not about social inclusion and a virtuous circle of increased participation in society and increases in incomes – it was simply about income transfers. Supporters of this state-centric approach realised this, but merely argued that the government should have maintained the initial pace of spending increases.
UNICEF must work harder
One of the main reasons why the redistribution strategy did not, and could not, have developed a dynamic of its own is that it failed to address the underlying socio-economic risk profile. Broadly speaking, there are two developments which can lead to a fall in poverty: the poverty rate within a given risk group can fall, or the size of that risk group can diminish, as more individuals leave it by switching to a low-risk group. For example, the single biggest risk factor for child poverty is parental worklessness. In every single country, children with no parent in employment experience significantly higher rates of deprivation than children with at least one working parent. It is in this context that the UK occupies an extreme position. On the one hand, its deprivation rate among children in workless households is the second lowest in Europe. No other country except Sweden has reduced the poverty risk associated with parental worklessness to such a low level (and even Sweden only leads by 1.5 percentage points). But at the same time, no other country in Europe has such a huge proportion of children in workless households to begin with.
Thus, moving the position of the UK ‘leftwards’ in Figure 1 ought to be a more obvious policy focus than moving it further ‘downwards’. This, however, has very little to do with public spending levels, and a lot to do with labour market institutions and work incentives in the welfare system (see Niemietz, 2011). And yet UNICEF seems to regard rates of parental worklessness as a given, and focuses only on those policy variables that are related to social spending. This is strange because even its preferred relative measure shows that the UK has reached the limits of what income redistribution can achieve. The reason why the UK ends up with a rather high rate of relative child poverty is not a lack of redistribution. When looking at incomes before taxes and transfers (i.e. market incomes), the UK starts off with a relative child poverty rate above 30% – more than twice as high as in the Scandinavian countries, and higher than anywhere else in Europe except Ireland. Through redistribution, the UK then reduces this rate by about twenty percentage points. Thus, the British welfare state redistributes a lot more resources to low-income families than its Scandinavian counterparts. It does not attain a Scandinavian-style income distribution because its starting point is a vastly higher level of market income inequality, due to the extent of worklessness.
The key difference between the UK and the Nordic countries is parental employment, not social spending. Even now in the present recession, the share of Swedish and Danish children in workless households has remained below 10% (Eurostat, 2012). Even among single parents, a group which faces particular time pressure, Sweden and Denmark reach employment rates above 80% (DWP, 2010, p. 23), compared with a mere 55% in the UK (Eurostat, 2009). The gap widens further when comparing workloads among those single parents who are in employment. In Sweden and Denmark, three out of four employed single parents work full-time (NOSOSCO, 2004, pp. 14–15). In the UK, the vast majority of employed single parents work between two and three days per week (ONS & HMRC, 2012). Hence, if the UK attained Scandinavian levels of parental employment, it could achieve much greater reductions in child poverty with much lower levels of public spending.
It is a shame that UNICEF ignores its own figures in order to revert to its familiar narrative, in which poverty is always caused by a lack of public spending and lack of redistribution.
Kristian Niemietz is an IEA Poverty Fellow and the author of A New Understanding of Poverty, IEA Research Monograph 65, 2011.